Employee/Officer Held Personally Liable For Patent Infringement

• Published date: 02 March 2022
• Subject Matter: Corporate/Commercial Law, Intellectual Property, Corporate and Company Law, Patent
• Law Firm: Manatt, Phelps & Phillips LLP
• Author: Mr Irah H. Donner

In Lubby Holdings LLC v. Chung,¹ the Federal Circuit held corporate officers and employees who actively assist with their corporation's infringement may be personally liable for inducing infringement even without any piercing of the corporate veil. The court also limited damages to infringement occurring only after the complaint was filed because the patent owner failed to properly mark its products with the patent number and failed to properly notify the infringer under the patent marking statute.

Henry Chung appealed the judgment determining he infringed U.S. Patent No. 9,750,284 ('284 patent) and granting damages. Lubby Holdings LLC owned the '284 patent, titled "Personal Vaporizer," relating to personal vaporizers that reduce leaking. Vaporous Technologies, Inc., was a nonexclusive licensee of the '284 patent. Lubby Holdings and Vaporous Technologies (together, Lubby) sued Mr. Chung for infringement of the '284 patent.

Mr. Chung unsuccessfully moved for judgment as a matter of law as to damages, contending that Lubby did not prove that it satisfied 35 U.S.C. ' 287's marking requirement. The jury found Mr. Chung personally liable for direct infringement of the '284 patent.

Mr. Chung appealed, and the Federal Circuit affirmed. Mr. Chung asserted that there was no evidence to maintain the jury's determination that he directly infringed the '284 patent. The court disagreed, however, and noted that there was evidence to show that Mr. Chung made, offered to sell and sold personal vaporizer devices that infringed the '284 patent. For example, Mr. Chung testified at trial that he sold the accused products through his company.

Mr. Chung contended, however, that he could not have infringed as a result of actions that he performed for his company, Esquire Distribution Inc., unless Lubby was able to pierce the corporate veil, which Lubby provided no evidence to support. The Federal Circuit disagreed because "that is not the standard."² According to the court, "corporate officers can be personally liable for their own acts of infringement, even if those acts were committed in their corporate capacity."³ In addition, the court said, "the 'corporate veil' [only] shields a company's officers from personal liability for direct infringement that the officers commit in the name of the corporation, unless the corporation is the officers' 'alter ego.'"⁴ Rather, veil-piercing standards do not control the distinct issue of direct liability for one's own unlawful or...